Tokai Carbon Co., Ltd. (hereafter the “Company”) announces that its Board of Directors adopted a resolution today to transfer the Company’s entire stake in a wholly-owned consolidated subsidiary Tokyo Seiko Co.,Ltd. to Chino Corporation (Head Office: Itabashi-ku, Tokyo; President: Takao Kariya). The Company today concluded a share transfer agreement with Chino Corporation. Details of the transfer are as follows:

1. Reason for the transfer of shares

Since its founding in 1940, Tokyo Seiko Co.,Ltd., a manufacturer specializing in radiation thermometers, radiometers, blackbody furnaces and measurement and monitoring systems, has offered products catering to the needs of the steel, cement, glass and other industries. The Company is aiming to become the global leader in carbon materials by strengthening its five core businesses: carbon black, graphite electrode, fine carbon, friction materials and industrial furnace-related products. Chino Corporation is a manufacturer specializing in measurement and monitoring equipment and instrumentation systems, and its growth strategy centers on strengthening of the radiation and thermal imaging-related businesses, which also represents an area of strength for Tokyo Seiko Co.,Ltd. The Company thinks that the transfer of shares can be extremely beneficial, both for its strategy of strengthening core businesses and for further prosperity of Tokyo Seiko Co.,Ltd.

2. Outline of the subsidiary to be transferred

(1) Company name: Tokyo Seiko Co.,Ltd. (2) Representative: Masayuki Nakagawa, President (3) Head office: 1-1, Kozakura-cho, Chigasaki-shi, Kanagawa, Japan (4) Establishment date: September 26, 1940 (5) Main businesses: Production and marketing of radiation thermometers, blackbody furnaces and furnace monitoring systems, etc. (6) Fiscal year end: December 31 (7) No. of employees: 20 (as of August 31, 2006) (8) Paid-in capital: ¥50 million (9) No. of shares issued: 1,000,000 shares (10) Shareholder (Ownership %): Tokai Carbon Co., Ltd. (100%) (11) Business performance in recent years:

Year ended December 31, 2004 Year ended December 31, 2005 Net sales 336 264 Ordinary income 34 11 Net income 17 6

3. Number of shares to be transferred and the Company’s shareholdings before and after transfer

(1) Number of shares held before transfer:           1,000,000 shares (Ownership: 100%) (2) Number of shares to be transferred:           1,000,000 shares (3) Number of shares held after transfer:           0 shares (Ownership: 0%)

4. Schedule

September 8, 2006:        Conclusion of share transfer agreement September 25, 2006:      Date of share transfer (Subject to change)

5. Impact on the Company’s business results

The Company estimates that the share transfer will have only a negligible impact on its consolidated and non-consolidated business performance for the fiscal year ending December 31, 2006. The Company’s full-year earnings forecasts, released on August 15, 2006, therefore remain unchanged.